For tax years starting in 2010, the $100,0001 modified AGI limit for conversions and rollovers to Roth IRAs is eliminated and married taxpayers filing a separate return can now convert and roll over amounts to a Roth IRA.
For any conversions or rollovers in 2010, any amounts that are required to be included in income are included in income in equal amounts in 2011 and 20122. If you elect otherwise, you can choose to include the entire amount in income in 2010
Ask a tax professional or financial advisor if a Roth IRA is the right choice for your retirement plan. Then, call our Banking Specialists or convert your account online. With these Roth IRA updates, now is a great time to convert to a high-yield Discover Bank Roth IRA CD.
Roth IRAs: funded with taxable dollars, withdrawals are tax-free
Traditional IRAs: funded with pre-tax dollars, withdrawals are taxed as regular income
1. Before 2010, conversions of traditional retirement accounts to Roth IRAs were restricted to households with adjusted gross income (AGI) under $100,000.
2. Before and after 2010, taxes owed on pre-tax contributions and investment gains in tax-deferred accounts converted to a Roth IRA must be paid in the year the conversion takes place. For 2010 only, taxes owed on pre-tax contributions and investment gains in tax-deferred accounts converted to a Roth IRA in 2010 may be spread over two years (2011 and 2012). However, your contribution may be reduced or eliminated depending on your modified AGI. Consult your tax advisor on these rules.
3. SEP IRA plans must have been in existence for two years in order to be eligible for conversion to a Roth IRA.
4. For employer sponsored plans to be eligible for conversion, a distributable event is required.
5. The values shown in the calculator are for illustrative purposes only and are not intended to apply to your individual circumstances.
